The latest patch level of VILE (9.7q) doesn't seem to read the $HOME/.vilerc file. This happened on both an Alpha/Tru64 box and a Solaris 9 box. I rebuilt 9.7p and it reads the $HOME/.vilerc file. I further tried to set VILEINIT on the 9.7q installed machine and it came back with this message:

Top half of the screen:
/u/drolfe1/.vilerc

Bottom half of the screen:
[No such function "/u/drolfe1/.vilerc"]
[Buffer '[vileinit]' is being displayed]

This also occured on the 9.7p machine. Maybe another issue??

I've attached my .vilerc. Let me know if there is anything else I can provide to aid your diagnosis.